Monday, July 13, 2009

"Caristia" is a Latin word, but Caesar wouldn't have understood it. It came into use in English records during the Middle Ages, meaning a "dearth", or shortage. Manorial records sometimes refer to a caristia of labourers.

This phrase seems to have meant both fewer hands than were needed, and increased wages for those that could be found. Both prices and wages were fairly slow to change, in the long term, during the Middle Ages partly because they were often set in terms of long term contracts for tenancy or service, partly because there were strong, especially religious, conventions about the correct levels for prices and wages, and against arbitrage.

But you can't buck the market entirely. Short term price and wage fluctuations were inevitable. During the thirteenth and fourteenth centuries, for example, wheat prices rose gradually from under 3s a quarter to over 6s. But during the bad harvests of 1315-17 the price hit 25s.

That was an extreme case, the sudden onset of global cooling after the wealth and comfort of the Medieval Warm Period. But there would be shortages of labourers from time to time anyway, with the normal fluctuations of the years and their harvests. I have a very heavy crop of cherries this year in my garden. Last year there were almost none. When that happens with cherries in a developed economy, I go to the shop and buy some that were grown somewhere that had a better harvest this year - trade smooths out supply. When it happens with wheat in a peasant economy, people die. During the Middle Ages, some years so many men died that it affected the level of wages.

A moment's reflection on what the reality of this must have been like gave me my opening sentence.

Why did ordinary variations in production have a greater effect during the Middle Ages than they do today? The answers are surprisingly relevant to us now, and to the sorts of arguments put forward by what you might call the neo-primitivists - that odd assortment of people from the green left to the isolationist, protectionist and libertarian right who want to return us to a golden age of disease and starvation.

The problem they had, in the past, is that they didn't trade*, and they didn't try to make profits - they weren't capitalists. This killed, from time to time, sometimes two digit percentages of the populations unnecessarily.

Here's an odd thing: in a tenant-peasant economy, when farmers produce just enough to feed themselves and to pay their dues, rents, tithes and so forth, market forces invert. When the price of a commodity rises (through scarcity) production falls and when prices fall, production rises. Higher prices mean you need less to pay your rents, lower prices mean you need more. This means that price swings, and scarcity and surplus, are amplified to damaging effect.

Capitalism, the investment of resources in trade for a profit within an economy and between economies, restored the positive relationship between supply and demand and gave rise to the stockpiling that buffers us against shortages today. And because we have capitalism, because we have relatively free trade, wages are no longer set by the number of people who died during the most recent famine.

* I wrote this in too much of a hurry. They didn't trade enough. Of course there was trade; without it there would have been no prices. But the classic pattern for the medieval Manor did not include the production of a surplus beyond subsistence and taxes/rents. Trade existed because of surplus production on estates that deviated from this classic pattern.

Moreover, they weren't sufficiently capitalist. Some people did buy grain and stockpile it, holding reserves until prices rose so they could make a good profit (regrating, something that was even illegal at times). As still happens today, such activity was roundly condemned by the Church as immoral.

This immoral practice saved hundreds of thousands of lives. Today, it saves hundreds of millions.

3 comments:

Interesting. However trade means that in many regions where food production is possible, free trade makes for substantially cheaper food to be imported instead of being produced locally.

This then causes that region to not only cease farming, but for capital to leave the region if there is no other way for people to generate wealth. And eventually those that stay behind end up so poor that they are immobilized and rely on foreign aid. (Think Haiti)

I agree, on the whole, capitalism replacing Church/Oligarchic control has been good times. However there are stresses that build up in the system when the ultimate goal of participants in an economy is to produce more wealth and generate more growth than everyone else. Especially when these stresses threaten social cohesion, lending institutions and the very environment that all economies ultimately rely upon.

But you knew that, everyone is familiar with the issues of globalization.

"Substantially cheaper food" makes a people more, not less, wealthy no matter where it is produced. You could even define wealth as the amount of food you can afford to buy.

In no part of the world is the only way to produce wealth through agriculture.

Haiti's problems have something to do with bad government.

Social cohesion is threatened more than anything by immigration, something I think we should have. We can overcome these damaging effects. It is not threatened by trade - which is what you mean by globalisation, in this context.

Lending institutions are in a crisis that was triggered by a combination of government intervention (mandatory sub prime lending), government intervention (inappropriate, not insufficient, regulation) and government intervention (barriers to entry to the industry too high; a regulatory regime favouring very large baskets into which all the eggs could be put). Government intervention is absolutely necessary - but not the sort of cronyist, innately corrupt examples we've seen in practice - corrupt in terms of politicians buying votes, and also in terms of the small group of self-serving, back-scratching individuals who rotate between national and international bureaucracies, political institutions and large enterprises.

Globalisation was a problem in this case - because many of these institutions were so intertwined internationally that they acted like dominoes.

But I never argue in favour of globalisation, per se. Instead, I'm advocating free markets and free trade. The only problems I'm aware of with these are the occasional manias - tulips, south sea bubbles, through to dot com and property bubbles and global warming - the last two greatly (and harmfully) amplified by governmental enthusiasms.

Damaging as they are, these bubbles are less harmful than the problems that accompany other, dirigiste or mercantile, systems, so far as I can see.

"Interesting. However trade means that in many regions where food production is possible, free trade makes for substantially cheaper food to be imported instead of being produced locally.

This then causes that region to not only cease farming, but for capital to leave the region if there is no other way for people to generate wealth. And eventually those that stay behind end up so poor that they are immobilized and rely on foreign aid."

This sounds plausible, but actually wouldn't happen.

Say the people of Ruritania want to import some of this substantially cheaper food? What do they use to pay for it? They'd have to already be producing something else.

Peter is correct. The choice to buy food for less cannot make you poorer.